What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 215 added, 14 removed, 83 unchanged (73% of the section changed)

12 unchanged sentences

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.

SPS Commerce is a global supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations.

SPS Commerce is the leading intelligent supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations.

Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.

10 unchanged sentences

We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers.

We classify the majority of our recurring revenue customers as '1P', with the exception of those recurring revenue customers that only have an online marketplace or e-Commerce connection within our network (which we refer to as '3P').

Following the divestiture of our 3P Revenue Recovery business on June 30, 2026, all recurring revenue customers are classified as 1P.

Prior-period references to 3P relate to customers that only had an online marketplace or e-Commerce connection within our network.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2026

Form 10-Q for the Quarterly Period ended June 30, 2026

Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.

8 unchanged sentences

Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this “ Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

Results of Operations

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

The following table presents our results of operations for the periods indicated:

Three Months Ended June 30,

2026 2025 Change

($ in thousands) $ % of revenue (1)

$ % of revenue (1)

Revenues $ 197,815 100 % $ 187,400 100 % $ 10,415 6 %

Cost of revenues 59,028 30 59,826 32 (798) (1)

Gross profit 138,787 70 127,574 68 11,213 9

Operating expenses

Sales and marketing 43,936 22 43,434 23 502 1

Research and development 16,957 9 17,271 9 (314) (2)

General and administrative 36,646 19 30,890 16 5,756 19

Amortization of intangible assets 9,381 5 9,509 5 (128) (1)

Loss on sale of business 23,454 12 — — 23,454 n/a

Total operating expenses 130,374 66 101,104 54 29,270 29

Income from operations 8,413 4 26,470 14 (18,057) (68)

Other income, net 1,997 1 773 — 1,224 158

Income before income taxes 10,410 5 27,243 15 (16,833) (62)

Income tax expense 3,546 2 7,510 4 (3,964) (53)

Net income $ 6,864 3 % $ 19,733 11 % $ (12,869) (65) %

(1) Amounts in column may not foot due to rounding

Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.

• ARPU increased 14% to approximately $15,100 for the three months ended June 30, 2026.

The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

• The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026.

The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,200 3P recurring revenue customers.

As of June 30, 2026, all recurring revenue customers are 1P.

Recurring revenues increased 6% to $190.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 .

Recurring revenues accounted for 96% of our total revenues for both the three months ended June 30, 2026 and 2025.

We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Cost of Revenues - The decrease in cost of revenues was primarily attributable to $1.7 million lower third-party personnel costs and $0.9 million lower software costs due to platform consolidation, partially offset by a $1.5 million increase in depreciation expense.

Sales and Marketing Expenses - The increase in sales and marketing expense was primarily attributable to a $1.2 million increase in third-party personnel costs, partially offset by a $0.7 million decrease in marketing spend.

Research and Development Expenses - The decrease in research and development expense was primarily driven by a $0.4 million decrease in depreciation expense resulting from lower capitalized research and development activities related to an acquired business.

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $2.8 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

equity awards upon executive retirement.

Personnel-related costs also increased by $2.2 million due to higher consulting costs supporting internal initiatives and increased headcount, while hardware and software costs increased by $1.1 million, primarily due to higher amortization expense related to system implementations.

These increases were partially offset by a $0.5 million decrease in charitable contribution expense.

Amortization of Intangible Assets - The decrease in amortization expense was primarily due to the normal run-off of amortization related to finite-lived intangible assets.

Loss on Sale of Business - The loss on sale of business was due to the divestiture of the 3P portion of the revenue recovery business.

Refer to No te B – Business Acquisitions and Other Transactions f or more information regarding the divestiture.

Other Income, Net - The increase in other income, net was primarily due to higher investment income, the favorable remeasurement of an acquisition-related earn-out liability, and an increase in unrealized foreign currency gains.

Income Tax Expense - The decrease in income tax expense was primarily driven by the reduction in pre-tax book income related to the loss on sale of business.

The decrease was partially offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.

Adjusted EBITDA - Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation.

Other adjustments for the three months ended June 30, 2026, included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs.

Net income is the most directly comparable GAAP measure of financial performance.

The following table provides a reconciliation of net income to Adjusted EBITDA:

Three Months Ended

(in thousands) 2026 2025

Net income $ 6,864 $ 19,733

Income tax expense 3,546 7,510

Depreciation and amortization of property and equipment 6,150 4,991

Amortization of intangible assets 9,381 9,509

Stock-based compensation expense 18,696 14,998

Realized gain from investments and foreign currency transactions (402) (107)

Investment income (1,211) (688)

Loss on sale of business 23,454 —

Other 154 106

Adjusted EBITDA $ 66,632 $ 56,052

Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue.

Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

The following table provides a comparison of Margin to Adjusted EBITDA Margin:

Three Months Ended

(in thousands, except Margin and Adjusted EBITDA Margin) 2026 2025

Revenue $ 197,815 $ 187,400

Net income 6,864 19,733

Margin 3 % 11 %

Adjusted EBITDA 66,632 56,052

Adjusted EBITDA Margin 34 % 30 %

Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the three months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period.

Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period.

To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments.

The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

The following table provides a reconciliation of net income per share to non-GAAP income per share:

Three Months Ended

(in thousands, except per share amounts) 2026 2025

Net income $ 6,864 $ 19,733

Stock-based compensation expense 18,696 14,998

Amortization of intangible assets 9,381 9,509

Realized gain from investments and foreign currency transactions (402) (107)

Loss on sale of business 23,454 —

Other 154 106

Income tax effects of adjustments (11,770) (6,285)

Non-GAAP income $ 46,377 $ 37,954

Shares used to compute net income and non-GAAP income per share

Basic 36,533 37,965

Diluted 36,577 38,099

Net income per share, basic $ 0.19 $ 0.52

Non-GAAP adjustments to net income per share, basic 1.08 0.48

Non-GAAP income per share, basic $ 1.27 $ 1.00

Net income per share, diluted $ 0.19 $ 0.52

Non-GAAP adjustments to net income per share, diluted 1.08 0.48

Non-GAAP income per share, diluted $ 1.27 $ 1.00

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

The following table presents our results of operations for the periods indicated:

Six Months Ended June 30,

2026 2025 Change

($ in thousands) $ % of revenue (1)

$ % of revenue (1)

Revenues $ 389,936 100 % $ 368,949 100 % $ 20,987 6 %

Cost of revenues 118,245 30 116,740 32 1,505 1

Gross profit 271,691 70 252,209 68 19,482 8

Operating expenses

Sales and marketing 88,670 23 85,068 23 3,602 4

Research and development 34,874 9 34,710 9 164 —

General and administrative 73,020 19 61,908 17 11,112 18

Amortization of intangible assets 18,701 5 18,097 5 604 3

Loss on sale of business 23,454 6 — — 23,454 n/a

Total operating expenses 238,719 61 199,783 54 38,936 19

Income from operations 32,972 8 52,426 14 (19,454) (37)

Other income, net 3,402 1 2,980 1 422 14

Income before income taxes 36,374 9 55,406 15 (19,032) (34)

Income tax expense 9,781 3 13,477 4 (3,696) (27)

Net income $ 26,593 7 % $ 41,929 11 % $ (15,336) (37) %

(1) Amounts in column may not foot due to rounding

• ARPU increased 5% to approximately $14,800 for the six months ended June 30, 2026.

The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

• The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026.

The decrease was driven by the divestiture of the 3P revenue recovery business (initially acquired in February 2025 as part of the Carbon6 acquisition), which resulted in a decrease of approximately 8,200 3P recurring revenue customers.

As of June 30, 2026, all recurring revenue customers are 1P.

Recurring revenues increased 7% to $374.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 .

Re curring revenues accounted for 96% and 95% of our total revenues for the six months ended June 30, 2026 and 2025, respectively.

We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Cost of Revenues - The increase in cost of revenues was primarily driven by a $2.1 million increase in depreciation expense and a $1.3 million increase in deferred costs due to lower capitalization associated with slower hiring.

These increases were partially offset by a $0.9 million decrease in personnel-related costs and $1.1 million of lower software costs due to platform consolidation.

Sales and Marketing Expenses - The increase in sales and marketing expense was primarily driven by a $2.4 million increase in stock-based compensation expense, partially attributable to equity awards granted to executives hired in the prior year, and a $1.3 million increase in third-party personnel costs.

Research and Development Expenses - Research and development expense remained relatively consistent compared to the prior year period.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $4.9 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of equity awards upon executive retirement.

In addition, personnel-related costs increased by $5.0 million, primarily due to increased headcount and non-capitalizable activities supporting system implementations, as well as consulting costs related to internal initiatives.

Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by an additional month of amortization related to intangible assets acquired from Carbon6 in February 2025.

Loss on Sa le of Business - The loss on sale of business was due to the divestiture of the 3P portion of the revenue recovery business.

Refer to Note B – Business Acquisitions and Other Transactions for m ore information regarding the divestiture.

Other Income, Net - The increase in other income, net was primarily due to the remeasurement of an acquisition-related earn-out liability.

Income Tax Expense - The decrease in income tax expense was primarily driven by the reduction in pre-tax book income related to the loss on sale of business.

The decrease was partially offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.

Other adjustments for the six months ended June 30, 2026 included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs.

Net income is the most directly comparable GAAP measure of financial performance.

The following table provides a reconciliation of net income to Adjusted EBITDA:

Six Months Ended

(in thousands) 2026 2025

Net income $ 26,593 $ 41,929

Income tax expense 9,781 13,477

Depreciation and amortization of property and equipment 11,984 9,948

Amortization of intangible assets 18,701 18,097

Stock-based compensation expense 36,769 28,865

Realized gain from investments held and foreign currency impact on cash and investments (522) (473)

Investment income (2,362) (2,537)

Loss on sale of business 23,454 —

Other 165 1,119

Adjusted EBITDA $ 124,563 $ 110,425

Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue.

Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

The following table provides a comparison of Margin to Adjusted EBITDA Margin:

Six Months Ended

(in thousands, except Margin and Adjusted EBITDA Margin) 2026 2025

Revenue $ 389,936 $ 368,949

Net income 26,593 41,929

Margin 7 % 11 %

Adjusted EBITDA 124,563 110,425

Adjusted EBITDA Margin 32 % 30 %

Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the six months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period.

To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments.

The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

The following table provides a reconciliation of net income per share to non-GAAP income per share:

Six Months Ended

(in thousands, except per share amounts) 2026 2025

Net income $ 26,593 $ 41,929

Stock-based compensation expense 36,769 28,865

Amortization of intangible assets 18,701 18,097

Realized gain from investments held and foreign currency impact on cash and investments (522) (473)

Loss on sale of business 23,454 —

Other 165 1,119

Income tax effects of adjustments (17,649) (13,570)

Non-GAAP income $ 87,511 $ 75,967

Shares used to compute net income and non-GAAP income per share

Basic 36,953 37,978

Diluted 37,026 38,132

Net income per share, basic $ 0.72 $ 1.10

Non-GAAP adjustments to net income per share, basic 1.65 0.90

Non-GAAP income per share, basic $ 2.37 $ 2.00

Net income per share, diluted $ 0.72 $ 1.10

Non-GAAP adjustments to net income per share, diluted 1.65 0.89

Non-GAAP income per share, diluted $ 2.36 $ 1.99

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

Critical Accounting Policies and Estimates

6 unchanged sentences

Accordingly, we believe that our policies for revenue recognition, internally developed software, and business combinations are the most critical to fully understand and evaluate our financial condition and results of operations.

During the three months ended March 31, 2026, there were no changes in our critical accounting policies or estimates.

During the six months ended June 30, 2026, there were no changes in our critical accounting policies or estimates.

For additional information regarding our critical accounting policies and estimates, see the discussion under "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.

1 unchanged sentence

Sources of Liquidity

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents of $154.3 million and net accounts receivable of $65.1 million.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2026

As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $173.2 million and net accounts receivable of $63.7 million.

Statements of Cash Flows Summary

The summary of activity within the condensed consolidated statements of cash flows was as follows:

Three Months Ended

Six Months Ended

(in thousands) 2026 2025

3 unchanged sentences

Operating Activities

The increase in cash provided by operating activities from the three months ended March 31, 2025 to the three months ended March 31, 2026 was primarily due to an increase in net income, as adjusted, for non-cash expenses of $8.2 million.

The increase in cash provided by operati ng activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in net income, as adjusted for non-cash expenses of $19.0 million.

Additionally, fluctuations in operating assets and liabilities resulted in an increase of $30.4 million driven by changes in the amount and timing of settlements.

Investing Activities

The decrease in cash used in investing activities from the three months ended March 31, 2025 to the three months ended March 31, 2026 was primarily due to cash used in the prior year to acquire a business of $141.6 million.

The decrease in cash used in inv esting activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to cash used in the prior year to acquire a business of $142.6 million.

Financing Activities

The increase in cash used in financing activities from the three months ended March 31, 2025 to the three months ended March 31, 2026 was primarily due to an increase in cash used for share repurchases of $ 7.1 million year-over-year to continue to deliver shareholder value.

The increase in cash used in fina ncing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in cash used for share repurchases of $ 38.8 million year-over-year to continue to deliver shareholder value.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2026

Contractual and Commercial Commitment Summary

Our contractual obligations and commercial commitments as o f March 31, 2026 are summarized below:

Our contractual obligations and commercial commitments as o f June 30, 2026 are summarized below:

Payments Due by Period

8 unchanged sentences

We expect to utilize approximately $18 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $15 million to be utilized thereafter.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2026

Future Capital Requirements

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis